More 20-somethings are moving in with their parents. Here's how they can build savings - without bankrupting mom and dad

By Genna Contino

Moving home can be a positive financial step for recent graduates, one money expert says

If your college graduate is moving back home, lay down some financial ground rules to set them up for success and protect your own bank account.

As the class of 2026 looks toward the future after securing their diplomas, some are preparing to move from their dorm room back to their childhood bedroom.

Young people moving back in with their parents is a trend that's grown significantly in recent years. In 2025, 49% of adults under 30 lived with a parent, according to the Federal Reserve's Economic Well-Being of U.S. Households survey published earlier this month. That's up 12 percentage points from 2019.

Some are doing so to save on living expenses: 42% of Generation Z members say they are living paycheck to paycheck, with 49% citing the high cost of living as a barrier to financial success, according to Bank of America's (BAC) annual Gen Z report, published Tuesday.

Moving home can be a lifeline for those getting financially situated after college. But money experts say ground rules should be set early to ensure that a recent grad's decision to save money doesn't end up draining their parents' coffers.

Read more: Inflation is now rising faster than your salary. Here's how long that could last.

"The cost of adulting is high," said Will Smayda, head of financial centers at Bank of America. "Moving home, it can be a positive financial step."

Set financial ground rules

First, the graduate and their parents need to be on the same page about how long they'll be living at home. Another person in the house means higher bills for things like groceries and utilities, and a defined timeline based on the graduate's situation, whether it's six months or two years, will help everyone navigate expectations.

Now read: Just graduated? Here's your financial cheat sheet for building real wealth.

Then parents should do the math to determine how much their child's return will add to their household expenditures. If they would need to tap into retirement or other savings to afford it, they should know it's OK to charge their child rent at an agreed-upon amount, financial experts say. This doesn't necessarily have to be a lump sum every month - instead, the child could buy groceries or pay the electric bill or family phone plan each month.

"The key is to help the child, but still hold them accountable," said Ksenia Yudina, a financial strategist and co-founder of Mostt, an app aimed at helping families invest in their children's financial futures.

Even for those who don't need their child to pay rent, getting them in the habit of paying bills is important, so they are prepared when they eventually move out.

From the archives (May 2025): Welcome to the real world, Class of 2025. Here are 5 money tips you haven't heard a million times.

When Nancy Hughes's daughter moves back home this year after graduation, she'll pay her mom a certain amount each mont, which Hughes will then put into a savings account for her. "That way, she'll get used to ... making a payment each month somewhere, but it will be saved up for her," said Hughes, a senior wealth adviser at Mercer Advisors who is based in Minneapolis.

Kossandra McDuffie, a wealth adviser at HB Wealth in Atlanta, had a client who did something similar. The client charged her son rent, but "what he didn't know was that she was putting that in a money-market fund," McDuffie said. "And when he was ready to move out, she gave it to him as a move-out, first-home type gift, because she didn't need it."

How new grads can maximize savings while their fixed costs are low

Even if a new grad is paying rent to their parents, it will likely be less than they'd be shelling out if they were living on their own. This presents a great opportunity to maximize their savings.

Recent graduates starting full-time jobs may find that it's not difficult to waste their first paycheck. While they can technically afford to go out to eat more or order a new wardrobe online, it's important to set up guardrails early to make sure a portion of their budget is directed toward savings and paying down debt.

Read more: 5 easy 401(k) moves to make now to start building long-term wealth

For those with significant student-loan debt, it can be challenging to make loan payments while building up an emergency fund or investing in long-term savings - and financial experts say that the repayment and savings hierarchy depends on each individual situation.

Those who are debt-free with considerable cash reserves could consider maxing out 401(k) contributions while they're living at home and have fewer expenses. For those still paying back student loans, experts recommend contributing enough to receive their employer's 401(k) match, if it offers one.

Student-loan borrowers can also apply for an income-driven repayment plan to access affordable monthly payments, Yudina said. Extra funds should be directed toward paying down loans with interest rates of 5% or higher more aggressively, to avoid paying more in interest over time.

Read more: More college students will need private loans to pay for school - but 40% of Americans won't qualify, according to a new report

Figuring out how to save and repay debt can even be part of the initial conversation between parents and graduates.

"If their parents have given them a $1,000 rent goal per month ... it could be $500 goes toward paying down their student loans, it could be $200 toward emergency savings and the other $300 toward some kind of long-term savings account," McDuffie said. "Tackling a little bit of each could give them this momentum to keep going."

What personal-finance issues would you like to see covered in MarketWatch? We would like to hear from readers about their financial decisions and money-related questions. You can write to us at readerstories@marketwatch.com. A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission.

-Genna Contino

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-22-26 1544ET